That was one of the key points shared by WROTB Chief Financial Officer Jacquelyne Leach this morning at a 2023 operating plan workshop for the public benefit company’s board of directors at Batavia Downs Gaming on Park Road.
Leach (photo at right) said that preliminary numbers indicate that, overall, net revenue available to the 17 municipalities, which include Genesee County, will increase by about $800,000 to $5.8 million – a 15.9 percent jump. Those figures are based on net revenue before post-employment benefits.
She also predicted that the amount of money handled at the corporation’s nine branches will go up by $850,000 to $47.4 million while Batavia Downs’ net win will increase by $3 million to $77.5 million, and intertrack wagering and live racing handle will be remain unchanged.
Moreover, Leach said that Batavia Downs’ net gain from operations will increase by about $375,000 to $6.6 million – with net losses from operation decreasing by about $409,000 to $1.4 million and branch retained surcharge revenue increasing by about $16,000 to $619,000.
The surcharge consists of a 5 percent tax that the corporation collects from pari-mutuel (horse racing) winning tickets and, in timely fashion, distributes to its member municipalities and other counties in New York State that have a race track.
Leach emphasized that the operating plan has not been finalized and the numbers could change prior to a vote by the board at its Dec. 1 meeting.
“This is still a work in progress,” she said. “The board, ultimately, will either vote to approve or disapprove the recommendations of management that really will come to fruition in the final plan that will be sent out in summary form to members next week."
Nine of the 17 board members attended today’s workshop, including a new member, Vincent Horrigan, who has been appointed to represent Chautauqua County. Richard Siebert, Genesee County’s director, was not at the non-mandatory meeting.
The plan, which projects the goals of the corporation’s components in monetary terms, is “a collective effort between officers, department heads and staff,” Leach said, adding that the packet features historical data from 2021 and 2022 and anticipated 2023 numbers.
WROTB’s major segments are gaming, of course; live racing and intertrack wagering, food and beverage, and The Hotel at Batavia Downs.
“Keep in mind those two major revenue sources, which are the pari-mutuel wagering and the video gaming activity, are based on our patrons,” she said. “That’s why we say this is a fluid, working document. It is a guideline for the corporation in which to maneuver in the next year.”
She said part of management’s responsibility is to “react” to situations and trends, such as snowstorms that keep customers away from the branches and Park Road, inflation, rising product costs or public health concerns such as COVID-19 – “and I hope we don’t have to deal with that again,” she noted.
“We have adjusted some of our expenses upward … such as the utilities or any of our cost of goods, our food costs,” Leach said. “And, conversely, forecast what are our increases in our … product to end user, the patrons, the customers. So, there's a lot that goes in to putting this plan together. Not only the historical trends and current trends, but where we are going as well. And where do we want to be? And how do we achieve … our net win goals for the next year.”
BRANCH OPERATIONS
Leach said the nine OTB parlors employ 31 people (about 10 percent of the total WROTB employee count) and are projected to generate about $760,000 in surcharge in 2023. This segment, however, has not been profitable in recent years – and the 2023 operating plan indicates a net loss of about $1.2 million.
When asked by Director Dennis Bassett (City of Rochester) if it might be beneficial to eliminate the branch operation, Leach and Chief Executive Officer Henry Wojtaszek said management has downsized that part of the corporation in recent years.
During the OTB parlor heyday, the corporation operated more than 30 branches.
Branch wagering did increase during the six months that Batavia Downs Gaming was closed due to COVID, Leach pointed out.
“That’s when the OTBs and Batavia Bets (online wagering) became invaluable to the corporation,” she said. “Batavia Bets stayed open and then our OTBs opened up at the end of May (2020) and beginning of June. So, at least we had money coming in the door.”
She also spoke of the importance of the EZ Bet locations (in restaurants and bars), which feature TVs, simulcast equipment and terminals for wagering without the overhead of paying staff members.
BATAVIA DOWNS GAMING
Leach said that credits played into the VLTs and credits won make up the “net win” – which is projected to increase from $74.5 million to $77.5 million in 2023.
“So, our total gross operating income increased just about $2.7 million (per the preliminary plan),” she said, adding that a revision is coming due to a decision to reduce the number of summer concerts from 10 to eight in 2023, and upon receipt of the hotel operating plan.
WROTB pays 49 percent of the net win to the state Division of Lottery, and that is expected to increase by $1.5 million, Leach said. Operating expenses also are going up, with the biggest increases to the horse racing purses, breeders’ fund and to the Western New York Harness Horsemen’s Association.
All told, net gain from Batavia Downs Gaming operations is projected to increase by about $374,000, she said.
GENERAL & ADMINISTRATIVE
Leach said that in 2023, management (per information received from department heads) will be assigning 65 percent of the $6.7 million General & Administrative expense to the Batavia Downs Gaming side of the operation and 35 percent of that amount to the off-track betting (racing, intertrack wagering, branches) side of the operation.
This is up from a 51/39 percent split in 2021 and 2022.
“And it makes sense because in the past two years we have closed eight brick-and-mortar facilities,” Leach said. “This procedure and how the corporation allocates those funds have been approved by Western’s outside audit firm. It’s sound reasoning the way it's done.”
HOTEL AT BATAVIA DOWNS
Leach said she just received a report from The Hotel at Batavia Downs, which is operated by an outside company.
“Those numbers will be incorporated into the final plan,” she said. “It was an addition of 92 rooms, which increased the bottom line by about $12,000.”
